Transcript Realizing Prescription Drug Value in an Environment of Market

The Implications of the New
Medicare Prescription Drug
Legislation: Pathways to a
Better Benefit
Anthony A. Barrueta
Vice President, Government Relations
Kaiser Foundation Health Plan, Inc
February 27, 2004
Overview
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New Medicare Part D Prescription
Drug benefit
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Challenges in benefit design
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Challenges in new standards for
formularies and utilization
management
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Limitations on filling in the donut hole
“Quality” and “Cost”
Challenges in market-based
prescription drug pricing
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“Price”
Things I Think are Interesting
but Don’t Plan to Talk About
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Drug discount card
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Provider of value?
Significant employer subsidies to
continue offering coverage
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What will employers do: continue/add
retiree drug benefits or send retirees to
Part D?
Health Plans and Part D
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Providers of the Part D benefit and the
endorsed card
Will continue providing non-Part D
retiree coverage for employers who
seek subsidies instead
Medicare will hopefully join health
plans in seeking an enhanced evidence
base
Full risk vs reinsurance payment
design
Formulary rules being debated
Will the “Best Price” exemption
improve ability to negotiate prices?
Physicians
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More certainty that patients will follow
through on prescribed therapies
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Increased pressure for prescribing
formulary drugs for a larger population
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but no less inconvenience regarding a
proliferation of formularies
Longer term implications for current
Part B covered drug
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especially low income patients
continuity of care concerns re donut hole
if dropped into Part D coverage, possibly
lower levels of coverage
Fundamentally uninvolved in drug use
management
Can the Market Work?
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Kaiser Permanente as a model
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Physicians practice as a group
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Drug Information Service
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they have access to comparative cost and
effectiveness information
Cooperative group practice with a culture
of fiduciary responsibility to the
membership
Supports formulary decisionmaking
Clinical information provided to physicians
How can Part D take advantage of
this?
Can the Market Work?
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Physicians deal with a single formulary
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Physician confidence in P&T and
formulary review process is high
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A key, but simple, distinguishing factor, the
benefit of which to physicians and patients
is often overlooked and should not be
underestimated
Formulary drug is prescribed 98 percent of
the time
Incorporates clinical review of generics
Sequencing of concerns -- clinical then
cost -- is critical
Open exception process
Is this compliant with Part D?
Drug Use Initiatives
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Follows the formulary process
Identifies relatively substitutable drugs
Identifies potential economic benefit
Promotes use of clinically appropriate alternative
with same quality but lower cost
May targets more expensive alternatives when
needed by identifiable patients, when possible
May target current patients, or only new starts,
depending on the drug and the condition
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Statins vs. SSRIs
Focus on Obvious Targets
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In 2001, five classes of drugs (16 drugs
total) represented fully 22 percent of total
US Rx spending (Total = $154 billion)
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SSRI antidepressants (4 drugs/ $8.1 b)
Proton pump inhibitors (4 drugs/ $8.5 b)
LS antihistamines (3 drugs/ $4.4 b)
Lipid lowering statins (3 drugs/ $8.7 b)
Cox-2 anti-inflammatories (2 drugs/$4.4 b)
Different strategies apply to each
Clinical Guidelines Case
Study
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Cox-2 inhibitors
“Appropriate” treatment for between 4
and 5 percent of NSAID-using arthritis
patients
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In that group, benefit is reducing risk of GI
bleeding from 1 in 75 to 1 in 200
50+ percent of new NSAID prescriptions
in US are for Cox-2s
KP use is approximately 5 percent
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Result of careful application of patient criteria
with support of physicians
Why did this work?
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Early recognition of limited benefit
and oncoming advertising blitz
Clinical research with Stanford and
development of validated NSAID GI
Risk SCORE Card
Close monitoring and clinician
feedback
Medical Group support, based on
the science
COX-2 Market Share
KP vs. National
95%
100%
80%
60%
46%
54%
40%
20%
5%
0%
K-P
COX-2's
National
Other NSAIDs
Initiative Case Study
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Statins
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Conversion program from brand
simvastatin to a therapeutically
equivalent dose of generic lovastatin
of existing simvastatin patients
Requires absolute physician
confidence in safety and
appropriateness of the switch
In the process, identify patients who
are not at goal and get them there
Overall, significant improvement in
care and improvement in costeffectiveness of the drug benefit
A Complex Demand Market
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Physicians prescribe, pharmacists
dispense, patients use and insurance
pays for drugs
Patients are insulated from cost and
are being stimulated, without full
information, to seek specific drugs
from physicians
Physicians, plans and pharmacies are
disaggregated
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Incentives are misaligned
Physicians do not practice as groups
Physicians must use multiple formularies
makes purchaser cooperation difficult
Lack of comparative data
How Does Part D Match up?
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Physicians prescribe, pharmacists
dispense, patients use and Part D pays
for drugs through PBMs
Patients are somewhat insulated from
cost, but coinsurance design is a
useful tool
Physicians, plans and pharmacies are
disaggregated
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Incentives are somewhat misaligned
Most physicians do not practice as groups
Physicians will use multiple formularies
Comparative Effectiveness research
funded?
Can Part D Do This?
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Physicians are only distantly
involved
Is there another way?
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PBMs or other new entities as provider
practice prescribing support
infrastructure
Medicare has an opportunity, but it
won’t happen organically
Formulary Management
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Formulary and utilization
management
2 in each class? Really?
Likely politicization of formulary
design process
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If too onerous, likely to have separate
Medicare formularies, making
management more complex
Sec. 1860D-4(b)(3)(C)(i)
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Title -- “Inclusion of Drugs in All
Therapeutic Categories and Classes”
Text -- “In General--The formulary must
include drugs in each therapeutic
category and class of covered part D
drugs, although not necessarily all
drugs within each category or class.”
Report language doesn’t resolve the
ambiguity -- parrots text, but doesn’t
state that conferees considered the
differences, let alone chose one
approach over the other
Sec. 1860D-4(b)(3)(B)(ii)
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Text -- “In developing and reviewing
the formulary, the committee shall-take into account whether including in
the formulary (or in a tier in such
formulary) particular covered Part D
drugs has therapeutic advantage.”
Report --“ . . .whether including a
particular covered drug in the
formulary (or in a particular tier in a
formulary) had therapeutic advantages
...”
A Short Discourse on
Medicaid Best Price
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And what it implies for Medicare and
market pricing of prescription drugs